Supply Chain Management
CHAPTER
14
Marketing
10
Lamb, Hair, McDaniel
Designed by
Eric Brengle
B-books, Ltd.
Copyright ©2009 by Cengage Learning Inc. All rights reserved
Prepared by
Amit Shah
Frostburg State University
1
LOI
Supply Chains
Supply Chain
The connected chain of all
of the business entities,
both internal and external to
the company, that perform
or support the logistics
function
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2
LOI
Supply Chains
Supply Chain
Management
A management system that
coordinates and integrates
all of the activities
performed by supply chain
members into a seamless
process, from the source to
the point of consumption,
resulting in enhanced
customer and economic
value
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3
LOI
Supply Chains
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4
Supply Chain Managers
Supply chain managers are responsible for
 Making strategic decisions
 Management of information through supply
chain
 Coordinating relationships between
company and external partners
LOI
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5
Benefits of Supply Chain
Management
Supply chain oriented companies
commonly report:
• Lower inventory, transportation,
warehousing, and packaging costs
• Greater supply chain flexibility
• Improved customer service
• Higher revenues
• Increased profitability
LOI
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6
LO2
Supply Chain Integration
Relationship Integration
Measurement
Integration
Technology and
planning Integration
Firm-to-Firm Social
Interactions
Operational
Planning and
Control
Material and service
supplier Integration
Internal Operations
Integration
Customer
Integration
Customer Integration
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7
LO3
Key Processes
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8
LO3
Customer Relationship Management
Customer
Relationship
Management
Process
The prioritization of a firm’s
marketing focus on different
customer groups according to
each group’s long-term value
to the company or supply
chain; designed to identify and
build relationships with good
customers.
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9
LO3
Customer Service Management
Customer
Service
Management
Process
A multi-company, unified
response system to the
customer whenever
complaints, concerns,
questions, or comments
are voiced; designed to
ensure that customer
relationships remain
strong.
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10
LO3
Demand Management
Demand
Management
Process
The alignment of supply and
demand throughout the supply
chain to anticipate customer
requirements at each level and
create demand-related plans of
action prior to actual customer
purchasing behavior.
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11
LO3
Order Fulfillment
Order Fulfillment
Process
A supply chain management
process that involves
generating, filling, delivering,
and providing on-the-spot
service for customer orders.
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12
LO3
Manufacturing Flow Management
Manufacturing
Flow
Management
Process
A process that ensures that
firms in the supply chain have
the resources they need
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13
LO3
Supplier Relationship Management
Supplier
Relationship
Management
Process
A supply chain management
process that supports
manufacturing flow by
identifying and maintaining
relationships with highly
valued suppliers
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14
LO3
Returns Management
Returns
Management
Process
A process that enables firms to
manage volumes of returned
product efficiently, while
minimizing costs and
maximizing the value of the
returned assets to the firms in
the supply chain.
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15
LO4
Supply Chain Management
Lean Supply
Chain
Management
The strategy that focuses primarily
on the removal of waste from the
supply chain to achieve the lowest
total cost to the members of the
supply chain system
The supply chain strategy
that focuses primarily on
Agile Supply
the ability of the firm to fulfill
Chain Management customer demand, even if this
means somewhat higher costs
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16
Mapping The Supply Chain
LO4
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17
LO5 Logistical Components of the Supply
Chain
Supply
Chain
Team
Logistics Information System
Sourcing & Procurement
Order Processing
Inventory Control
Warehouse & Materials Handling
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Transportation
18
LO5
Sourcing and Procurement
The Role of Purchasing:
• Plan purchasing strategies
• Develop specifications
• Select suppliers
• Negotiate price and service levels
• Reduce costs
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19
LO5
Order Processing
Electronic
Data
Interchange
Information technology that
replaces paper documents
that accompany business
transactions with electronic
transmission of the
information.
http://www.walmartstores.com
Online
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20
LO5
Inventory Management and Control
Inventory
Control
System
A method of developing and
maintaining an adequate
assortment of materials or
products to meet a
manufacturer’s or a
customer’s demand.
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21
LO5
Inventory Management and Control
Materials
Requirement
Planning
(MRP)
An inventory control system
that manages the
replenishment of raw
materials, supplies, and
components from the supplier
to the manufacturer.
Distribution
Resource
Planning
(DRP)
An inventory control system
that manages the replenishment
of goods from the manufacturer
to the final consumer.
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22
LO5
Inventory Replenishment Example
Sleep Right Mattress
Retail Store
Sleep Right
Distribution Center
ABC Mattress
Wholesaling Company
Great Mattress
Company
MRP
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23
LO5
Materials Handling Functions
Receive goods into
warehouse
Identify, sort, and label
goods
Dispatch the goods to
temporary storage
Recall, select, or pick the
goods for shipment
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24
LO5
Transportation
Airways
Water
Pipelines
Motor Carriers
Railroads
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25
Transportation Mode Choice






LO5
Cost
Transit time
Reliability
Capability
Accessibility
Traceability
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26
LO6
Supply Chain Performance
Measurement
A good metric is characterized by five qualities:
•Creates understanding of strategic objectives
and tactical plans
•Promotes behaviors that are consistent with
achieving these objectives
•Allows for recording of actual results/outcomes
•Allows companies to compare themselves to
competitors and customer expectations
•Motivates continuous improvement
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27
LO7
Trends in Supply Chain
Management
Globalization of supply chain management
Advanced computer technology
Outsourcing of logistics functions
Electronic distribution
Outsourcing of logistics functions
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Advanced Computer Technology
• Automatic identification systems
– Bar coding
– Radio frequency technology
• Communications technology
• Supply chain software systems
LO7
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LO7
Outsourcing Logistics
Functions
Outsourcing Benefits
• Reduce inventories
• Locate stock at fewer plants and
distribution centers
• Provide same or better levels of service
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30